Weekly Buzz: 📊 Why the markets are jumpy right now

17 November 2023

If you've been keeping an eye on the markets lately, you've probably noticed that they’ve been rather volatile over the past few weeks. Case in point: the S&P 500 index has climbed more than 7% since the start of November.

So, what’s happening here?

Positive data has boosted investor confidence

Since late summer, both global stock and bond markets had been on a downward slide, driven by stronger-than-expected economic growth and stubborn inflation. But since the end of October, economic data started to turn a positive corner, and the US Federal Reserve has started to take a more dovish tone. With this, financial markets abruptly reversed course.

One key piece of data: US core inflation – which excludes more volatile food and energy prices – just cooled to its lowest annual rate in two years.

There's now a growing optimism that the US central bank’s fastest monetary policy tightening campaign against inflation (since the 1980s) might start to wind down.

Alongside data which point to a surprisingly robust US job market, some economists are predicting that the world’s largest economy can manage a soft landing, beating back inflation while also narrowly avoiding a recession. If that scenario were to pass, it’s likely many other economies will benefit from America’s momentum.

And investors have responded positively to the influx of positive news, with many other stock market indexes trading sharply higher over the past few days. But it might still be a little premature to celebrate; inflation’s still above the Federal Reserve’s 2% target, after all.

What’s the takeaway here?

The past few months underscore how quickly investor sentiment (more on this in our Jargon Buster below) can shift, especially in today's uncertain economic environment. In such volatile markets, it's critical to stick to a plan and resist making snap decisions.

Instead of trying to time the market, a well tested approach is to stay invested in a diversified portfolio (shoutout to our General Investing portfolios) and use dollar-cost averaging, or DCA. That means investing a fixed amount at regular intervals, regardless of market fluctuations. This smooths the impact of sudden market changes and can benefit you when you get more bang for your buck at price drops.

It's a steady and practical way to navigate uncertainty in investing, and can help you take advantage of the longer-term benefits of staying in the market.

📰 In Other News

The Bank of Japan finally loosened up

Faced with worries about inflation, the Bank of Japan (BoJ) is now beginning to throttle back its monetary policies after years of extraordinary measures.

Japan’s economy has been stuck in the mud for decades, and the country’s central bank has battled that deflation with “yield curve control” since 2016. The tactic involves keeping both short and long-term interest rates low, aimed to get the country shopping.

That worked a little too well though, so faced with above-target inflation, the BoJ loosened its grip on 10-year government bond yields – a key long-term interest rate – a few months ago.

And now that the central bank has removed a rigid upper limit set on the 10-year yield, investors can have a bigger impact on its rise and fall. The 10-year government bond yield hit its highest point in nearly nine years after the announcement.

Investors may now want higher returns for the increased uncertainty involved in holding Japanese bonds, which should have the ripple effect of increasing interest rates. And because higher rates would also make the country’s currency more attractive to foreign investors, the yen might be prevented from falling any further.

This article was written in collaboration with Finimize.

🎓 Jargon Buster

Investor sentiment

Like a weather vane, investor sentiment can tell us which way the wind of market trends is blowing. Basically, it’s the overall mood of investors towards the financial markets. It's influenced by a bunch of factors like economic reports and global events. This sentiment can sway markets, as it can drive investors to either buy more (when they're feeling bullish or positive) or sell off their holdings (when they're bearish or pessimistic).

✈️ 9 new ETFs with our Flexible Portfolios!

Ready for takeoff? We're thrilled to introduce 9 new ETFs in our Flexible Portfolios! 

From the vibrant economies of India and Vietnam to sectors within the S&P 500, depart for a wider world of ETFs. Now with over 70 ETFs to choose from, you can tap into the growth of even more regions and industries.

Just mix and match to build a portfolio that works for you – they’re just that flexible.

🗓️ Save the Date

Retirement isn’t a one-size-fits-all journey. Join our in-person event to get practical tips for building your retirement plan and a complimentary 1:1 consultation with experts from EPF and Wealth Vantage. Dinner is provided! 

Limited seats available. 

⬆️ Give your cash the upgrade it deserves!

Unleash the power of your savings with our ultra-low-risk cash management solution! Enjoy a projected 3.8% p.a. return without the hassle of lock-in periods or minimum investment amounts. Simple’s returns are closely tied to interest rates, so when rates go up, so does Simple’s ability to earn more on your cash. 

Whether you’re building up your emergency fund, saving up for an upcoming expense, or putting aside funds to dollar-cost average into your investment portfolios, Simple keeps your cash secure in even the most volatile market environments. Experience the freedom of flexible saving and watch your money work smarter, not harder. Start today and transform any amount into an earning opportunity – because it's that simple.

StashAway Simple™ is only available on your mobile app. Find out more about it here

Do you know that US Treasury yields are at decades-high? So it’s a good time to consider putting your cash to work in our USD Cash Yield portfolio. 

It lets you invest in short-term US Treasuries and earn 5.4%* p.a. on your cash. With high inflation, it’s important you manage your cash well. 

With our USD Cash Yield portfolio:

✔️ Yield in USD

✔️ No minimum or maximum investment amount

✔️ No lock-ins

USD Cash Yield is only available on the mobile app.

*The yield to maturity is provided by the fund manager and is not a guarantee for future returns. Yield as of 31 August 2023.

Share this

  • linkedin
  • facebook
  • twitter
  • email

Want more?

We thought you might.

Join the hundreds of thousands of people who are taking control of their personal finances and investments with tips and market insights delivered straight to their inboxes.